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To: IceShark who wrote (27747)	10/12/2000 10:31:33 PM
From: Cynic 2005	Respond to of 436258

Still, Mr Greenspan’s eagerness to redefine inflation gives Stephen Roach, the chief economist at Morgan Stanley Dean Witter, a horrible sense of déjà vu. In the 1970s, Mr Roach worked in the Fed, under the then chairman Arthur Burns. When oil prices surged in 1973-74, Mr Burns asked the Fed’s economists to strip out energy from the CPI to get a “less distorted” measure. As food prices then rose sharply, they also stripped out food, followed by jewellery, mobile homes and so on, until over half of the contents of the CPI were excluded. Yet the core measure continued to rise. Eventually, but much too late, the Fed slammed on the brakes. With hindsight the Fed’s fixation on core inflation was a serious blunder which kept it in denial, says Mr Roach. Naturally, this time things are completely different. economist.com

To: IceShark who wrote (27747)	10/12/2000 10:32:25 PM
From: Cynic 2005	Read Replies (1) \| Respond to of 436258

Look at the cahrt on junk yield spreads! economist.com

To: IceShark who wrote (27747)	10/12/2000 10:36:19 PM
From: Cynic 2005	Respond to of 436258

All in all, Mr Summers is playing with fire by doing anything to suggest that his support for a strong dollar is even slightly equivocal. Some market folk think he is less commited than his predecessor, Robert Rubin. Worse, many economists think the dollar is overvalued, and vulnerable, not least because of America’s huge and growing current-account deficit. Market sentiment can turn on a dime, and the foreign-exchange market is notorious for overshooting when it changes its mind. Rather than worry about a weak euro, Mr Summers might do well to contemplate the real possibility of a weak dollar. It may be closer than he thinks. economist.com